Menu

CBO sends Obama ‘five-alarm’ walk-up call on ‘Fiscal Cliff’

According to world stock market reactions, the reelection of Barack Obama is not cause for celebration–if anything, it is more a cause for great anxiety, because as goes the United States, so goes the rest of the free world.

And today is no exception, as after our own stock market plunged by over 300 points yesterday, the largest such dive this year, the rest of the world markets followed suit, as reported in an Associated Press article today.

Europe and Asia view the United States ‘fiscal cliff‘ as a serious threat to the world’s economic recovery, which, except for China–now the world’s second largest economy–has been even more pathetic than our own.

Perhaps like many Americans, they realize that the outcome of our general election was to ‘freeze’ things almost exactly as they had been for the past two years–regardless of the fact that President Barack Obama and his administration have been an abject failure in terms of the U.S. economic recovery and fiscal management, while $800 billion of tax increases and government spending cuts that will engage on January 1, 2013 threaten America with a pulverizing ‘double-dip recession.’

Due to Democrat complacency and still lacking in leadership, it was Republican Speaker of the House of Representatives, John Boehner–of Ohio–who was the first to step in front of a camera post election, to give a call to action on our long avoided ‘fiscal cliff,’ according to a FOXNews article yesterday.

Speaker Boehner is looking for “major solutions” in 2013 “that begin to solve the problem,” offering that Republicans will agree to “new revenue,” by closing loopholes and ending certain deductions through comprehensive tax reform–only if Democrats are willing to accept serious spending cuts and genuine, substantial entitlement reform.

In order to garner Republican support for new revenues, the president must be willing to reduce spending and shore up the entitlement programs that are the primary drivers of our debt.

In fact, Boehner is proposing tax-rate decreases on individuals and corporations, to stimulate economic recovery and growth–as opposed to Obama and the Democrats wanting to ‘score’ points by taxing those making more than $250,000 even further.

In a sense of shear, blissful irony, many people in that income bracket live in the predominantly Liberal Democrat cities that voted for President Obama, whose already sky-high total tax burden and cost of living effectively render them in the middle class.

Finally, Senate Majority Leader Harry Reid also chimed in on Wednesday, after Boehner, stating that “we need to start working together, a lot. Gridlock is not the solution.”

Then, ‘overplaying his hand,’ he stated that the election was a “mandate … that the richest of the rich have to help a little bit.”

As to a ‘mandate’ from the election, other than simply winning the contest with billions of dollars in free mainstream media public relations help, the only distinction President Obama came away with is being the first incumbent president in history to be reelected by a smaller margin than when he was first elected–that is it.

Too, it is well known by the half the constituency that doesn’t get its news [propaganda] from the mainstream media, that the top 3 percent of income earners already pay 70 percent of the total federal income taxes collected, while 47 percent pay zero!

But, Reid was intractable, as always…

I’m going to do everything within my power to be as conciliatory as possible. I want to work together, but I want everyone to also understand, you can’t push us around. I think we should just roll up our sleeves and get it done.

The [non-partisan] Congressional Budget Office (CBO) could not agree more, as they put out what amounts to a ‘five alarm’ wake-up call for President Barack Obama and Congress, with the release of a disturbing new report that analyzed the ‘consequences’ of letting the ‘fiscal cliff’ spiral out of control, as reported in a FOXNews article today.

The ‘good news’ is that the combination of automatic tax increases and spending cuts would cut the deficit by $503 billion through next September.

The ‘bad news’ is that this severe, immediate fiscal austerity would cause the economy to shrink by 0.5 percent next year and cost millions of jobs–driving the ‘jobless rate’ back up to 9.1 percent by Labor Day 2013.

Capitol Hill watchers believe that this will be a multi-step process, beginning with a [serious] ‘down payment’ on the deficit and action to curtail the tax increases and $109 billion in across-the-board cuts to the budgets of the Pentagon, Medicare and Medicaid–all tough decisions that would have to be made before the holiday recess.

Democrats are sure to press for a guarantee that tax reform doesn’t end up hurting middle-income taxpayers at the expense of upper-bracket earners.

Republicans want to press for corporate tax reform and a guarantee that the top rate paid by individuals and small businesses goes down along the way.

The bottom line is this–18 months from now, if a majority of Americans cannot state that they ‘better off’ than they are today–the Democrats will lose their majority in the Senate, and likely drift off into political oblivion, forever.